National unemployment rose to 9.8 percent during November, equaling 15.1 million Americans out of work. While foreclosure rates have fallen in recent months, the number of people delinquent on their mortgages doesn't seem to be changing, instead it appears banks are becoming more lenient on late payers in an attempt to stem the flood of foreclosed properties on the market.
How does this affect Christmas?
Many American families are planning on having fewer gifts under the tree this year. But, what does that translate to in real dollars? Per this Gallup poll, Americans plan to spend an average of $715 on gifts for the 2010 holiday season.
For some of you this will seem like an outrageous amount of money and for others, this may not seem like enough. So for purposes of perspective, let's consider this based upon percentage of annual income. Per this article, the average American income is right around $44,000 per year. The median income is approximately $33,000 per year.
Average - $715/$44,000 = 1.6% of gross income spent on Christmas presents.
Median - $715/$33,000 = 2.2% of gross income on Christmas presents. How does this fit with your personal spending plans? Does it seem on track?
For further perspective, the woman's husband that I lent money to in Cambodia earns $4 US per day. What we typically spend on Christmas is nearly his entire annual salary.
Why do we spend so much?There are plenty of external pressures to spend more and more each year.
Per Wikipedia:
"Consumerism is a social and economic order that is based on the systematic creation and fostering of a desire to purchase goods or services in even greater amounts."
How are the pressures pushing consumerism?
Christmas ads starting in September.
Keeping up with the Jones's,
Outdoing an ex-spouse perhaps,
- Status symbol of your success,
- American cultural trend that how much I spend on you is a direct reflection of how much I care about you...
What are we trying to accomplish, really?
Are we spending for the sake of our children?
Per this NY Times article, parents' average contribution to their child's college costs vary between $3,500 and $18,000 depending on income bracket. Of those funds, $700 to $2,800 is borrowed by the parents. How about we cut Christmas expenditures in half and put it into college savings instead?
Continued on the next pageOn Saturday night, I had dinner with Wendy and Dennis, two Get Rich Slowly readers who recently moved from Phoenix to Portland. We talked about a lot of things — most of them nerdy. We also chatted about the ever-evolving nature of Get Rich Slowly.
“I’ve noticed you’re writing more about credit cards lately,” Wendy said. “Is that because you’re using them more often?”
“Well, maybe,” I said. I thought about it for a moment. “My stance on credit has certainly changed in the past five years, so that might be part of it. But it’s probably just an accident. I seem to cover subjects in phases. I might write a lot about frugality for a while, then write a lot about investing, then about making more money. I guess I’ve just had more to say about credit cards recently.”
Wendy confessed that the credit card information doesn’t do much for her. “I’m phobic about credit cards,” she said.
“That’s okay!” I said. “There’s nothing wrong with being phobic about credit cards. I used to be scared of them too. I’ll never argue that you’re making a bad choice by avoiding credit cards.”
“I’m open to the possibility of using credit cards when I know I’ll use them to spend only the money I have,” Wendy said, “but I’m not ready yet. For a while, Dennis and I had a prepaid card, and even with that, we had control issues.”
Numbers versus emotions
We talked about how our money problems didn’t happen because we were bad at math, but because we were unable to separate money from emotions.
The first tenet of the Get Rich Slowly philosophy is that financial success is more about mastering the mental game of money than about understanding the numbers. Wendy summarized this perfectly when describing her past spending habits: “When I bought things, I didn’t buy them with numbers; I bought them with emotions.” She’s trying to do better now, but it’s still a challenge.
“You always think the Future You will have more money,” Wendy said. “It’s okay to spend today because you’ll find some way to pay for it tomorrow. But you never think that the Future You might drop out of college or have kids or get into a car accident. The Present You doesn’t really know the Future You.”
I loved this insight. I’ve thought often about how the Future Me always seems to be vastly different than the Present Me — and different than I would have predicted. Yet I used to make dumb decisions in the present as if my future self would somehow develop the superpowers to save me. Instead, Future Me simply ended up cursing my past choices.
Fantasy versus reality
How tough is it to predict your future path? Here’s a simple test: Think about where you were five years ago — where you lived, who you spent time with, what you did. How does that compare with where you live today, who you spend time with, and what you do with your time? Chances are your life today is much different than it used to be — and much different than you might have predicted it would be.
Here are two examples from my own life:
- When I was a junior in college, I expected to graduate, settle in a big city, get a job as a counselor or therapist, get married, have kids, and live happily ever after. I had no inkling that five years later I’d own a house in my hometown, work at the family business (something I swore I’d never do!) in a job I hated, and have over $20,000 in consumer debt. No inkling. (Only the “get married” part of my expectations proved to be correct.)
- Five years ago, I was buried under more than $35,000 in consumer debt, still worked at the family business in a job I hated, and hadn’t even conceived of Get Rich Slowly. (I was just beginning to read personal-finance books.) I could never have imagined that today I’d not only be out of debt, but also have substantial savings and be a full-time writer.
Sometimes your future life fails to live up to your expectations, and sometimes it exceeds them. But in nearly every instance, you cannot predict where life will take you. In fact, you can’t even predict what will make you happy! No wonder Present You often does such a poor job of setting things up for Future You.
Present You versus Future You
When I speak to college students, I warn them to not spend based on their expectations for the future. It’s tempting to believe your future self will be richer, smarter, stronger, and more successful — but that doesn’t always happen.
What can you do about it? How can you strike a balance between today and tomorrow? There’s no mystery. You can fund your future by making smart choices in the present, including:
- Have a plan. Based on who you are today and what you know about life, set goals for the future. Sure, these goals may change. That’s okay. Use these goals to create a budget or financial plan in the here and now.
- Practice conscious spending. Stop spending on the small, unimportant stuff so that you can afford the things that matter to you. This requires long-term thinking, but it’s worth it.
- Avoid debt. Don’t expect your future self to be able to cope with the financial mistakes you make today. Don’t make things tougher for yourself than you have to.
- Save for retirement (and other goals). Remember the extraordinary power of compound interest: The more you save today, the less you need to save tomorrow.
Before our dinner conversation returned again to dorky topics, Wendy made a final observation: “Once I stopped thinking about the Future Me as being different than the Present Me, my whole perspective changed. I started making decisions on what I needed and could afford today instead of what might happen tomorrow.” Exactly!
To stop making poor decisions with money, it’s often necessary to ignore fantasy and deal with reality. Instead of counting on Future You to save the day, do the hard work now. Your future self will thank you for it.
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Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
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Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
Assange: Republicans, Democrats, Fox <b>News</b> conducting terrorism <b>...</b>
Assange counters 'high-tech terrorist' label by accusing his critics of terrorism.
Julian Assange | Sarah Palin | Fox <b>News</b> | Mike Huckabee | Mediaite
In an exclusive interview with Cenk Uygur on MSNBC's Dylan Ratigan Show, Julian Assange described criticism in Washington and elsewhere of WikiLeaks as nothing short of attacks on journalism and the first amendment.
Neandertal Relative Bred With Humans - Science <b>News</b>
Previously unknown Siberian group left fingerprints in some humans' DNA.
bench craft company scam
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